NAHB CEO: Grim Outlook for Housing

Fox/MSN headline: Grim outlook for housing market, NAHB CEO warns…

National Association of Home Builders CEO Jerry Howard warned on “Varney & Co.” Monday of “a tough time” ahead for the industry as data revealed the housing market has been slowing down.

Howard provided the insight on the same day it was revealed that builder confidence plunged in July amid soaring inflation and increased interest rates, which stalled the housing market by dramatically slowing sales and traffic from prospective buyers, according to the association.

Home builder confidence in the market for newly-built single-family homes dropped 12 points lower to 55 in July, its seventh consecutive monthly decline according to the NAHB/Wells Fargo Housing Market Index (HMI) released on Monday.

The index can range between 0 and 100 with any print over 50 indicating positive sentiment. Any reading above 80 signals strong demand.

Side note: Lumber is selling at a price below where it opened in 2021. $LUMBER weekly chart:

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Business Insider/Yahoo headline: A key gauge of the housing market saw its steepest drop since the early days of the pandemic

Brian Evans
Mon, July 18, 2022 at 1:59 PM·2 min read

:pushpin: Builder confidence fell sharply in July, the National Association of Home Builders said Monday.

:pushpin: The NAHB attributed the fall to high inflation and rising rates, which are crushing mortgage demand.

:pushpin: The drop is the seventh-straight monthly decline and the NAHB’s lowest-ever reading, excluding the early pandemic.…

High inflation and rising interest rates pushed home builder confidence lower for a seventh-consecutive month, bringing the index to its lowest level since the start of the pandemic, the National Association of Home Builders said Monday.

The NAHB/Well’s Fargo Housing Market Index fell 12 points to 55 for new single-family home builds in July, which is the lowest reading since March of 2020 and the second largest single-month decline in the history of the index. A survey above 50 usually means builders view current market conditions as more favorable than not.

Builder confidence has fallen in line with interest rate hikes from the Federal Reserve, which is desperately trying to tame inflation that has persistently risen to new highs each month. The latest consumer price index showed prices rose at the fastest pace in 41 years in June.

Despite the Home Building bad news piling on, the most traded homebuilders ETF, $XHB, experienced a faded breakout on Monday, but yesterday, that faded breakout sprouted legs and walked to the upside.

I’m keeping this one on my radar for a possible play to the downside. I believe the next leg down will be brutal and take out recent 52-week lows if these Macro headlines continue to accrete:

From that same Business Insider/Yahoo article above is this quote:…

“This was an accident waiting to happen,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note on Monday. “Homebuilders have been in denial about the extent of the drop in demand, despite mortgage applications falling by more than a quarter over the first half of the year, with no end in sight to the decline.”